FF is a private limited company which sells flower arrangements for special occasions such as birthdays and anniversaries. This is a very competitive market. The business sells all of its products online. Customers use the FF website to choose the flowers they like and how they want them arranged. Once a customer has placed an order, a skilled employee will use job production to produce the flower arrangement. Employees are paid a commission based on the final selling price of the arrangements which they produce. The finished product is then delivered to any address within 50 kilometres of the FF premises. Most customers receive their order within 24 hours of placing it, apart from during busy times of the year. The directors of FF are concerned that the current product has reached maturity in the product life cycle. A suggestion has been made to produce low-price flower arrangements. There would be 10 different arrangements which would be made using batch production. These flower arrangements would be sold through local retailers. The Finance Director has suggested that the new venture may decrease FF's working capital, which is currently $18000. She has provided information from the statement of financial position (see Table 2.1). Table 2.1: Information from FF's statement of financial position | | $000 | |---|---| | Inventory | 11 | | Trade receivables | 20 | | Overdraft | 5 | | Trade payables | X | Half of the current workforce would be used to make the low-price flower arrangements. These employees would be paid using a time based payment method. The Human Resource Director has suggested that this may lead to poor employee motivation.